What if There Was a Reasonable Compromise on Medicare?

Sen. Joe Lieberman has found an ally for the middle-of-the-road Medicare reform proposal he laid out a few weeks ago. On Tuesday, the independent Senator from Connecticut and conservative Republican Tom Coburn unveiled a tweaked version of Lieberman’s plan. They hope to build a coalition of support for the proposal, which they say could save $600 billion over the next ten years. The plan won’t save Medicare for all future generations, but it’s full of reasonable ideas that could gain bipartisan support – if politics don’t stand in the way.

One element of Lieberman’s original plan – raising the Medicare tax on high-income earners – was dropped during negotiations with Coburn. What replaced the tax increase is different in name only. Under the revamped proposal, means testing is stronger than Lieberman originally suggested. This is another way of getting wealthier seniors to pay more out of pocket, without technically “taxing” them more. Also added to the Lieberman plan is a new proposal to curb Medicare fraud. Otherwise, the plan is basically the same as Lieberman originally wrote it earlier this month.

Here are the major tenets of the Lieberman-Coburn plan:

* Raise the Medicare eligibility age from 65 to 67, which the senators acknowledge is only feasible because the Affordable Care Act makes it easier for 65 and 66-year-olds to buy private insurance.

* Institute a single Medicare deductible of $550, ask seniors to pay coinsurance for services from 5% to 20%, and set a new annual “out-of-pocket” maximum of $7,500, which will protect seniors from medical bankruptcy. (Higher income seniors will face higher “out-of-pocket” maximums, up to $22,500 for individuals earning $160-$213,000 per year.)

* Limit supplemental insurance coverage so that seniors can’t purchase Medigap policies to cover all of their out of pocket expenses. Studies show this change could reduce over-utilization without harming health.

* Stop paying hospitals for debts incurred, but not paid, by Medicare beneficiaries.

* Increase Medicare Part B premiums for all enrollees, but especially high-income earners. Increase Part D premiums for high-income earners.

* Fix the SGR for three years. This would prevent Congress from having to constantly vote to prevent Medicare reimbursements from falling dramatically.

* Combat Medicaid Medicare fraud. See here for more on this provision.

According to a Lieberman aide, the senator was particularly eager to collaborate with Coburn due to the Oklahoman’s history as a member of the Gang of Six. Coburn reportedly quit the Gang of Six over Democrats’ unwillingness to cut enough from the Medicare program. Democrats will likely still be reluctant to significantly cut Medicare spending, as doing so could undercut their politically potent message that it’s Republicans who want to gut the program. But the growing costs of Medicare remain unsustainable and there are two features of the Lieberman-Coburn plan that might appeal to Dems: It relies on the continued existence of the Affordable Care Act and asks wealthy seniors to pay more into the program.

Of course, raising the eligibility age for Medicare is an absolute no-go for most liberals and many Democrats, many of whom are also still smarting from what they saw as Lieberman’s disloyal behavior during the health care debate.

Hours after Lieberman and Coburn unveiled their plan, House Minority Leader Nancy Pelosi bashed it, saying it would be “unfair” to ask seniors to pay more and wait longer to get into the program “while Republicans back tax breaks for Big Oil and corporations that ship American jobs overseas.” She added, “Just like the Republican plan to end Medicare, this proposal is unacceptable, especially for struggling middle-class Americans.” Senate Majority Leader Harry Reid called the plan “a bad idea.”

Republicans, meanwhile, see the debt ceiling fight and current deficit-weary political climate as their best chance to privatize Medicare or at least cut major spending on that program and Medicaid. This is why they might be reluctant – even with Coburn, aka “Dr. No,” leading the way – to endorse a plan that preserves the fundamental structure of Medicare as a single-payer government program.

Lieberman aides say they hope the Medicare proposal gradually gains enough momentum that legislative leaders and the White House – currently engaged in closed-door negotiations ahead of the impending debt ceiling vote — will be forced to include it in any deal package.